Middleby reports record earnings
Remember Middleby?
The Elgin company, hidden behind the Cobbler’s Crossing subdivision, is still doing awesome.
The AP story:
Shares of Middleby Corp. rose sharply Thursday after the manufacturer of restaurant and cooking equipment reported its fourth-quarter profit climbed 14 percent on acquisitions, beating analyst estimates.
The stock climbed $1.82, or 8.5 percent, to $23.29 in afternoon trading, despite a swoon in the broader market. Middleby shares have ranged from $20.45 to $68.40 over the past year.
Late Wednesday, the Elgin-based company said its quarterly net income was $17.3 million, or $1.04 per share, compared with $15.3 million, or 89 cents per share, in the year-earlier period.
Revenue for the quarter was $151 million, up about 4 percent from $145.5 million in the year-earlier period.
Analysts surveyed by Thomson Reuters expected earnings of 88 cents per share on revenue of $161.1 million.
For the full year, net income climbed 22 percent to $63.9 million, or $3.75 per share, from $52.6 million, or $3.11 per share. Revenue climbed 30 percent to $651.9 million from $500.5 million.
Excluding the acquisitions of New Star International Inc., FriFri and Giga Grand Cucine, sales declined 14.4 percent in the quarter and 4.6 percent for the year, Middleby said.
“Business conditions were difficult during the fourth quarter due to the general economic situation,” said Selim A. Bassoul, chairman and chief executive, in a statement. “However, we were able to lessen this impact with cost reduction measures and improved profitability from recent acquisitions.”
He expects the continued lower cost of steel will benefit the second quarter of 2009 and the second half of the year.
For the year, revenue up 30% and net up 22%. Not bad. On the negative side, Middleby’s growth is dependent on acquisitions. The high yield market is now effectively closed, and it has no cash to take advantage of low valuations. The only thing it has to offer are shares, and that’s probably not going to be enough to continue the company’s roll-up strategy.
Middleby has had a good run though.
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The problem with serial acquisitors in the midst of a recession/depression is servicing the debt load they also acquired, as sales and profitablity take an inevitable hit.
Kudos on Q4 and 2008.
But the share price is still down more than 60% from their 52 week high AFTER the 8.5% rise the other day.
Yep, they have their work cut out for them just to service their debt.
To grow their bottom line they would need to bring in new revenue sources through acquisitions, but the only currency they have is their stock, and targets aren’t likely to go for that right now. And even if they were able to use stock, the dilution would probably mean their EPS does not improve. But they would be in a safer position as far as debt coverage.